People on the Pandemic Unemployment Payment will be paid the social welfare Christmas bonus this year.

The measure was one of the last agreed during final negotiations on the largest budget in the history of the State.

The package, expected to be worth around €20bn in total will be announced at 1pm this afternoon.

Finance Minister Paschal Donohoe says Ireland will run a deficit over the next two years that would have been “unimaginable before COVID-19. #Budget2021https://t.co/hrqdVjYXCZ pic.twitter.com/DxBqOJcIHX

— NewstalkFM (@NewstalkFM) October 13, 2020

Speaking on his way into Cabinet this morning, the Finance Minister Paschal Donohoe says Ireland will run a deficit over the next two years that would have been “unimaginable” before COVID-19.

“None of us saw the kind of future difficulty COVID-19 could be in terms of the scale and disruption it has caused,” he said.

He said the increase in Irish borrowing in in line with other countries that are in similar circumstances.

“While the increase in our national debt in 2020 has been very, very significant, we have also seen a huge increase in the private savings our economy,” he said.

“So, to a degree, the increase in public borrowing is a consequence of the understandable increase in private savings as a result of the apprehension and concern people have.

“The reason we are doing thali is to inject the investment into our economy to help protect jobs, support income and put in place the resources we will need next year for COVID.”

Minister for Public Expenditure Michael McGrath outside Dublin Castle, 31-07-2020. Image: Sam Boal/RollingNews

Meanwhile, the Public Expenditure Minister Michael McGrath said the aim of the Budget is to give people hope and confidence.

“It is a very significant day and I think the essential task that Minister Donohoe and I face today is to give the Irish people hope,” he said

“Hope and confidence. Hope that we will come through this really difficult period and confidence in the fact that we are going to be providing a record level of public expenditure, investment and support.”

The Christmas bonus will be available to people who were on the Pandemic Unemployment Payment for at least four months of the year.

People receiving Jobseekers payments will also benefit from the move. Under normal rules they would have to be receiving State support 15 months to qualify for the payment.

The Christmas bonus package is expected to cost €350m.

Budget 2021 will see the Government borrowing extensively to meet the cost of COVID-19 and Brexit.

Those will be the two main pillars of the budget, alongside getting people back to work.

Health

The health budget is expected to increase in the region of four billion euro, split almost equally between COVID and other healthcare.

It is expected that money will be used to bring hundreds of new hospital beds on stream and increase ICU capacity.

Economy

A fund will be set up for businesses that have had to close because of COVID-19.

There will also be targeted funds to help businesses impacted by Brexit adapt to the new customs arrangements.

While the commercial rates waver is also to be extended.

Tens of millions of euro is to be put aside for the live entertainment industry as well.

Tax

Income tax will remain unchanged in this budget; however, the cost of living will go up for some people.

There will be a 50c increase in the cost of a pack of cigarettes, but alcohol is to be left alone.

Carbon tax will increase by €7.50 a tonne which will mean it will cost €1.47 extra to fill a tank of diesel and €1.28 for a tank of petrol.

A bag of coal will cost 90c more and a bale of briquettes 20c more.

For the most vulnerable there will be a €3.50 increase in the fuel allowance to offset this.

Transport

The Green influence on the budget can also be seen in a €360m fund for walking and cycling infrastructure.

Meanwhile motor tax will rise for those driving high polluting cars and fall for those driving zero emission vehicles.

Housing

Capital expenditure is going to increase in the budget with a large part of that being a renewed focus on social housing.

An emphasis will be put on direct builds by councils and housing bodies while details of the new affordable housing scheme are also expected.

The help-to-buy scheme is also set to be extended at the increased rate of 30,000 euro for first time buyers.

Reporting from Sean Defoe